How do you start a non-profit organization?
84the not for profit
The process you use to form a not-for profit organization also known as an organization without share capital will depend upon the rules and regulations in effect where you reside.
The links accompanying this hub will help those who live in the United States or Canada get the formalities rolling.
However, before you start reading the legal jargon or filling our forms, I want to share the experience I have gained through setting up not-for-profits organizations over a 25 years span.
The first and perhaps most important step is to have a clear understanding of why you want to create a not-for-profit. Are you planning to champion a cause, poverty, the environment, violence or another issue that is dear to yoru heart?
Or are you planning to create a charity to raise funds for a good cause?
There is a legal difference between an organization that raises funds for good works and an organization that advocates for political justice.
So why do you want to create this organization? If you plan to raise funds you will want to register as a charity so that you can give tax receipts to the donors, but if you also do political work you may not be allowed to register as a charity. Find out what the rules are where you live. A trip to the public library can help.
You are going to need to develop a mission statement and your ability to articulate why you want to set up the organization in the first place will go along way to getting that done. The mission statement is a brief statement of the purpose of your organization.
This next step is the one I believe is the most important unlike a for profit business an individual cannot setup a not for profit organization. Once again depending upon the rules in place where you live you will need from three to five people including you.
This group will at first be the organization’s steering committee; the people who guide the not for profit through the process from dream to reality. They may also become the agency’s first board members or will help recruit board members.
Once you have the reason worked out why you want to create a not for profit look for people who will share this interest and have a degree of passion for the project.
Passion is important because in the early stages no one is getting paid.
The development of a not for profit is not an overnight activity and it is well worth it to take the time to find people you can and want to work with as it will save you heartache and disappointment down the road.
If you already have your members then you are well on your way.
Once you have the steering committee in place you can work on your mission statement. From the mission statement will flow the organization’s goals and objectives.
You will also need a set of bylaws to govern the agency. The bylaws set out the roles and responsibilities of the Board of Directors, how frequent meetings of the Board take palce and other operational issues.
This is the point were a lawyer comes in handy, especially if you are going for charitable status but regardless of that, you want to get the wording correct and be sure that you have dotted all the Is and crossed all the Ts.
If you think about the not for profit incorporation process as being similar to preparing a business plan you will be in the right head space to bring it all together.
Are you planning to be an employee of this organization; in other words are you doing the work to create a job for yourself? If the answer is yes consider setting up a company to do the same thing.
Why? A not for profit is governed by a Board of Directors who do the staffing, especially in the beginning. You cannot sit on the Board and apply for a job at the same time.
This brings us back to the purpose of setting up a not for profit, the why. I have worked and am working with people who want to address various issues, in some case a not for profit was necessary, but in others, there was little need for the formal organization.
Then, if you still want to proceed find out the rules and regulations governing the start up and registration of a corporation without share capital or a not for profit; now proceed one step at a time.
Starting a Not for Propfit
- Starting a Nonprofit Organization
This topic in the Library provides comprehensive advice and materials for anyone who is considering starting a nonprofit organization. The reader can use the free information in this Library topic, along with other Library topics that are referenced
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Thanks Scottie.
Thanks Bob for answering this request. Since you have experience in this maybe I can pick your brain a bit. I am thinking of starting a non-profit bringing art programs into the community. My idea is that the classes are free for parents, so that all kids can have access to art. Yes I do want to create a job for myself however, preferably in the actual teaching- but I do have several people that would help me, and serve on a board. The idea is to have several teachers, different mediums to work with, which of course all cost money. So what do you think?
This is a passion of mine, I really don't want to start another "regular" business, I want these art classes to be free. So I guess I would need to be out there writing for grant funds and such.
This appears to be a good idea and if you have the board members then you could be the employee; you may still have to go through a formal hiring process,especially if government/ the peoples' money is involved.
finding the first round of funding can be difficult especially for a new organization. It is hard to shrink this down into this space but I'd start with detailing the benefits the program will bring, then who will use the program and are there any other similar programs in the region.
It's good to have resources. Thanks.
True enough thanks for the visit.
Thanks Bob, I am in Australia, but I read this anyway, and it seems the rules are at least similar here.Funding is probably a bit thin here at the moment
I sense funding is tight everywhere which means the one needs to be well prepared when seeking funds. Glad this hub was useful. Thanks for stopping by.
Question; When do you HAVE to register for your organization?
The rules depend upon where you live. Usually you do not register until you have the paperwork complete.
I live in Canada, and just started a Organization called One Day.. (we're focused on diversity) and I have a friend told me that "I don't have to register" but I'm researching to make sure..
Is it a federal or provincial organization?
Thanks for writting this. There is certainly a lot of paper work and bussinesss sense involved with creating non-profits. Getting a lawyers help (exspeically in the US) might be a good idea for some people too. I thought readers of this article might be interested in this one: http://hubpages.com/hub/NPOresources
Your posts are always helping and interesting. Will always be looking forward to read more of your hubs! :)
Thanks and thanks for dropping by.
I am also looking to start an non-profit organization for the education of poor people. This hub gives me a lot of information. thanks
Thanks, glad it helped, thanks for dropping by.
Great site. Very informative.
Thanks for dropping by.
hi
I find this very useful. I plan to help blind people by providing telemarketing jobs which I beleive they can easily do on their own.
The question is, as a NPO can we do ask companies to give us contracts for customer services and to do business and then provide jobs for blinds and give away this profit to blind people by supporting computers and other equipments
I will appreciate you help
Thanks
Check with your local government as to relevant rules and regulations, thanks for dropping by.
hi bob, here in dar es salaam, our team is going in for accessable health care in tanzania but no one seems to care what should we do, thanks
All the best.
Hi BOB sEVERAL OF US WANT TO START A NON PROFIT FISH AND GAME CLUB HERE IN NEW BRUNSWICK SO THAT WE CAN APPLY FOR FUNDS TO DO A FEW STREAM RESTORATION AND WILDLIFE HABITAT PROJECTS. iS THE FIRST STEP GETTING INCORPORATED? WE ALREADY HAVE PEOPLE FOR THE BOARD AND OUR BYLAWS AND CONSTITUTION FIGURED OUT.
Greetings ron, yes, incorporation as a npo in New Brunswick is the next step.
Thank you for simplifying the basic guidelines. I am torn between my starting a mobile food vending trailer(for profit)during normal business hours, and then using the same as a "mobile soup kitchen" (after hours) feeding homeless/elderly throughout Miami and Miami Beach, Florida. Using profits and goods (plus lefovers) from the normal business hours. Any suggestions? Thanks for your help! :)
a mobile food vending trailer(for profit)during normal business hours, and then using the same as a "mobile soup kitchen" this is a promising
Bob, I want to start a day care center for children of all ages and use fundraisers as part of the means of earning money, but also want local and area businesses to contribute financially as well as local and community churches. I live in northern Indiana, can I do this? I am currently enrolled in online college in Healthcare
Administration, any suggetsions?
Check the state laws, a visit to a nearby public library is a good start. Ask them for information re: start up of non-profit.
Bob, great hub! I'm curious about something you said. The part about employee vs board is a little confusing to me. If you're an officer of a non profit corp, can't you get paid for all the time you need to put in? You want the control of your organization and you also need to put in a lot of time so another job would be out of the question. Can't you get paid to cover your personal expenses like a job? Thanks for your help. Jess
As member of the board you do not get a salary.
Hello Bob,
this is a great overview of the mindset and what is required to start a non-profit organization. I am just wondering if you know of a step-by-step guide to aid in the process of starting such an organization?
which country?
for Canada.
Thanks
this is all very usefull. after reading a few comments, im thinking i dont fall under a npo. i want to start an orgainzations that helps soldiers and their loved ones. there are alot of girlfriends and fiances that have no resorces for help cuz to the govt we dont matter. we didnt rush in to get married like some others before our soldiers deployed.. im the one that has created the idea and i have a few others that believe the same as i, but im scared of having a board, so then would i just have to become a business and incorporate?
If you become a business what would you sell; or how would you make the money to run the organization. You may want to do this on a volunteer basis.
Interesting article.
If I start off a non profit organization, and being on the board at the start, while everything we do is volunteer work, but a year or 2 down the line, it becomes a full time job, that requires one of the board members to become an employee, how would that work?
1st check local regulations, however, board member would have to resign board position. Why would the full time position require a board member?
Thanks for the quick answer Bob, I guess I am confused about the whole board member responsibility.
I thought if I am starting up a non profit, with a few people that believe in my project, the board is a requirement. So logically I would start off as a board member?
We will do most of the work on a volunteer basis, but if everything does go according to plan, then it will require a full time position and volunteering is just not possible anymore.
I guess I don't understand why a board member cannot be an employee. So does this mean, that whomever sits on the board of any non profit company, never draws a salary?
Board members do not draw a salary, they are volunteers who oversee the organization, in order to ensure that it is fisicaly responsible and stays true to its mandate.
Great Stuff
I am wanting to set up a NPO that will help artist who are out of work. We will be raising the money with other artist's work and selling it with all profits going toward the NPO. This may be dense or redundant but is this a legit way of making money without setting up a separate business since it is all not for profit?
This sounds doable, you can earn money as long as all the proceeds go to the agency operation and no profit is taken; however, it is wise to consult with a lawyer before proceeding.
hi
im a kid and i want to start an organization for poor people & feeding homeless i would like to know how to start on this please (:
You start by finding out what the laws governing the development of a npo are where you live.
Thanks for the hub, I am looking towards setting up a not for profit to help with legally immigrants have support when the government decides to make them pay more than they should to become citizens. I am not sure if this is a good work or a politic group. I am really glad you wrote this, it may save me time or it may teach me this is something that would be way over my head.
Best of luck with your project, make sure you do thorough research before getting too far along in the planning. Thanks for dropping by.
i need help to start a charity orginasation to teach poor children.help,,,bmoemedi@rocketmail.com
Where are you located and what is your specific goal?
Thank you so much for this information. I will be putting it to use for myself.
All the best in your endeavour, thanks for dropping by.
Great stuff Bob. Setting up Non-Profits and charitable organizations should be made even easier considering the benefits to society in general. Kudos for a great piece.
I agree, as long as there is accountability and transparency, doing good works should not be difficult. Thanks for dropping by.
Setting one up is pretty easy, but it takes TIME, especially to do it right - I have been working with a not for profit for the past 6 months helping to start it up, get it running, first round supporters. It's a process, but well worth it for those interested. Biggest hassle, waiting for the IRS to grant 501(c)3 status.
Hey Bob, great article. I'm from Canada a own a senior citizens moving company. We always get extra furniture given to us to donate but a lot of the places we dry and donate to refuse because they can be pretty picky on what they take sometimes. We were thinking of starting a NPO and taking these donations and selling ourselves and then donating the money to a seniors charity of our choice.. Would this conflict with our normal profit business and would it be ok for me and other owners of the company to sit on the board??
From your comment, it seems like you would be running two businesess, one npo and one for profit. This is a question for a lawyer.
This is one of the best Hub i read.I am extremely interested in NGO and NPOs.i used to ba a part of an NGO working at grass root level, engaged in promotion of livelihood and Integrated Natural Resource Management....awewsome lens.Loved it...plz add some more useful information on this particular topic if you can..I voted you up...
Glad you found it useful, thanks for the comment.
I live in Canada and wanna start a NPO for children in africa.. Do the fundraising here and help in africa. Is it different with how u set it up?
I do not think so but consult the regulations in your province and talk with a lawyer.
THANKS BOB I FINALY HAVE AN IDEA OF WHAT I'M GETTING MYSELF INTO,,THIS IS REALY USEFULL INFORMATION.
I am please you found the information useful, thanks for letting me know.
Hi Bob
Thanks for your info. I want to set up a non-profit charity and charge a nominal fee to clients or members to view natural cures for different health problems and use the proceeds to fund scientific research ( health, history, religion). I will be doing the research and do not require payment except for expenses - travel etc. Am I able to be on the board as well?
Jo
A lawyer is best suited to answer this, my feeling is that it could seem like a conflict of interest.
Love that you have information that your sharing it is very helpful in my time of need! I am thinking of starting a non-profit organization, since i have been helping others for some time now. Is it true that one can make a profit but not really worth much of anything? Basically to cover the business, to keep it running? Do you get more help from people and charities by being for profit or for non-profit?
A not-for profit, charitable organization can give receipts for the donations they receive which can make it easier to raise funds. Always consult a lawyer to clarify issues,
Thanks for the response. I have contacted others for help. But they are saying that it would not benefit them if they would help me because they feel as if we are in competition. Do you have to have 501(c)3 in order to get donations? Is it true that, in order for someone to make donations you must be registered through the state with your business name?
That is likely to be the case, however, check your state's regulations regarding the set up of charitable npos.
My 17 year old twin boys want to start a NPO with a friend. Can they do it?
It depends upon the regulations where you live, check.
Hi Bob thanks for the great article! I am wondering some more info about the steering committee, the board of directors, employment, and incorporation.
First, once the original steering committee locates board members, does the steering committee still exist? Or does the Board of Directors take the place of the steering committee?
Second, once a Board of Directors is in place and if the steering committee still exists, can someone who sits only on the steering committee become an employee of the NPO?
Third, I am a recent college grad... During my undergrad years, I wrote a business plan and won a grant from my university to launch a pilot program, which I did. It was a college readiness program that I launched at an inner-city high school. The program results were excellent. This is an idea I am working on for forming a NPO. I'm kind of a "one man band" right now. I feel like I have no idea where to start to get the right people for a steering committee, but especially finding Board members. Any tips on locating Board members?
Finally, for the steering committee - could these include college students, or should it include people who are well off financially? What about family members for the steering committee? However, I have a feeling I should keep it diversified from the start.
Sorry for all the questions. If you have time to answer, I would definitely read your answer and appreciate your time.
Thank you.
Trish
tkgonzal@asu.edu
Once the NPO is formed the steering committee can dissolve; so people who were members of the steering committee but are NOT board members can be employees.
Diversity is the best bet for the board; you need a variety of skills to make it work right, college students are fine, the main concern is people who will make and honour a commitment.
Thank you very much for reading my post and for responding. Have a great day Bob :)
It is very helpful, thank you very much for the information can assist many people.
You are welcome, thank you for taking the time to comment.
Thanks for broadening my scope! I am in Botswana,graduated with political science & public administration. Yes, I want employment, but want to start a political education trust to help the public especially in remote areas & members of local authorities.Political awareness level is very low!
All the best with your work and thank you for dropping by.
I was wondering if this similar process is required in an area which an Indain reserve is located; I am speaking about the lack of an organization that administers local recreational programming. would this be the proper path to take to setup a local recreation authority. The community that I live in is in dire straights of recreational programming; this I am hear is due to the result of no funding caused by jurisdictional issues, provincial, federal, crap like that
US or Canada, it may make a difference. I do not know the answer and advise checking with local authorities first and then a lawyer.
Bob, great primer on first steps for nonproftis. I'm working with Armanino McKenna, a consulting firm in California. They have a department dedicated to nonprofit organizations and auditing. They've just posted some audit process recommendations as nonprofits are more likely to experience fraud. I thought this group of readers would benefit.
Hi Bob, I have a hard time asking. I have the potential of several people becoming what I have called sponsors but I am now being told they would be Champions for the cause. As an example if I wanted a certain person to represent our non-profit how and what do I ask of them. We need exposure and someone to bring interested funding partners to our cause/needs. How do I approach them. How do I know if the celebrity is "the one"?
The first step is some research, what has the celebrity, in question, supported in the past; are they connected to any causes at the moment, what? google their name and see what turns up, once you know somehting about them and if the fit seems good, make contatc, via a letter or email and state your case. Good documentation will help you get your point across.
Hi, Bob. You said that a member of the board could not take a salary. Does that apply to the director/founder? It seems if a person wants to dedicate themselves to philanthropy they only have 2 choices: 1. Be homeless (unless they are already wealthy, retired, or married to someone who will be the provider) or 2. Work for someone else's nonprofit as an employee. Granted, initially all positions will be volunteer positions, but as an organization grows it will need to hire staff and the responsibility of the Directer will become greater and greater. It seems as if the founder would have to step down from Director and become a paid CEO (which is odd that you would need to "step down" to get paid). The sad thing about that is that the board (that you put together) could let you go (then, the organization that you founded would be completely out of your control). In addition, any other CEO is probably going to want a higher salary than the founder would be willing to take (so long as the founder's heart is in the right place). It all seems odd to me. Is there really no way to dedicate yourself full time to philanthropy without being someone else's employee? For many people, depending on a spouse (or a big bank account) are not options.
You have summed it up fairly well. You may want to consider taking the social enterprise approach take a look here http://www.grameen-info.org/index.php?option=com_c
Bod!im grateful for what u r doing for millions of people who have the passion for the voiceles,homeles and the unmplyed,however its stil sounds odd that the founder/director is not the benefialy now what happen if the founder of NPO get a salary to recover the expenses spent in the fist place nd how wil one feed the family please help its serious?Thank you.
Step down from the board and apply for the job.
Hi Bob,
iam a young person who wishes to start an NGO loaning business intended individuals with money,but i don't have a structure,money i don't now where to register as iam here in South Africa.
the only thing that i have is the business idea,so please help me what must i do? willthis work?
You need to know the laws governing NGOs where you live, check with local government offices for who you need to contact, a lawyer can be helpful at this point.
Hi Bob, this discourse has been really insightful. Thanks for starting it up, and for replying every question.
I would like to know why it wrong for a founder of an NGO to be employed by the same NGO? And how else can one follow through with a desire for change and impact when he/she hasn't the funds?
You cannot sit on the Board of directors and be an employee at the same time; you can be the founder and step down from the Board or never sit on it and then apply for the job, however, as always, talk with a lawter who can explain the legalities involved.
Hi Sir Bob,
I am a Kenyan Citizen that has been reading allot of your articles and comments to people. I am glad to tell you that, you have really motivated me.
I am on the early stages of registering my charity organisation,Prosperity For The Poor Foundation.(PFTP).It has been hard for me to get people with whom we share the same Passion with.
I was brought up from a poor background, and so I want to help the poor improve their livelihood by offering educational scholarships to needy children. I am preparing the constitution as I continue to search for people with the same vision.
Sir, which is the best source of funds for A charity organisation like mine?
Sir, can I work with anyone in forming the organisation (board member), then employ resourceful people at a letter stage?
Is it possible for you to introduce me to any of your readers with whom we share the same vision so that we may work together?
Thank you.
I wish you well in your efforts.
I started working for a non-profit health centre this month. Your post caught my eye. Not likely something I would take on myself but I like to know about how things work.
Thanks for taking the time to read and comment.
Hi Bob,
Thanks for this post. My husband and I are canadian citizens and have been working for 4 years in Eastern Africa for an organization.
We have just started and registered a local organization in Kenya. We have a board and we sit on the board.
We are planning on returning to Canada and wanted to know if we can register a sister organization in Canada to raise funds for our organisation in Kenya?
Greetings, that should be possible, but check the laws in the province you plan on relocating to, keep up the great work.
Thanks for your answer!
Scottie JD 3 years ago
Really good article Bob, very useful